Home Improvement and Furnishing Chains Go Multichannel in 2015
Big box home improvement retailers provide omnichannel updates
As discussed earlier in the series, Home Depot (HD) and Lowe’s (LOW) management provided a strategic update to investors at separate conferences held in June. During the discussion, company management shared how their respective teams were trying to attract the pro (professional) customer.
Pro customer initiatives
Kevin Hofmann, senior vice president and president of the online business of The Home Depot (HD), mentioned that HD currently has a less than 10% share of the pro customer’s total spend. It’s interesting to note that pro customers are more prone to spend in a store than online. However, their tendency to order on the Web is growing.
Hofmann believes the online adoption rate for the pro customer has been slower, since they’re more familiar with the store layout and visit the store much more, about a hundred times a year on average. Buy online, pickup in store (or BOPIS) remains a popular ordering tool with the pro customer, as they can check out compelling store offers while picking up orders.
Pro customers are estimated to account for about a third of HD’s sales. HD is looking to up the contribution from the pro customer through its Pro Xtra loyalty program and by building relationships. The program has millions of members. The program provides customers with the following:
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view all purchases and receipts online
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classify receipts by job
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enable runners to use BOPIS in their stead
Rival Lowe’s is also targeting the pro customer, which accounts for about 30% of the retailer’s (XRT) (RTH) sales. According to Michael A. Jones, chief customer officer of Lowe’s, believes the company can aim for a higher share of the pro market. It launched www.lowesforpros.com, a transactional site that lets the pro customer manage orders and requisition lists online.
Business-to-business (or B2B)
Over the long-haul, the B2B opportunity may outgrow consumer sales for many retailers. Amazon (AMZN) and Alibaba (BABA) may have the first mover advantage in this vital piece of the e-commerce pie.
HD, LOW, and AMZN are part of the portfolio holdings in the Vanguard S&P 500 ETF (VOO). About 12.5% of VOO’s holdings are invested in the consumer discretionary sector.
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